Starbucks is scaling back discounts and promotions
By Nathaniel Meyersohn, CNN
New York (CNN) — Expect to see fewer promotions at Starbucks.
The coffee chain is scaling back promotional offers through its mobile app to get customers to pay full price for its coffees and teas, the Wall Street Journal first reported Monday and confirmed by CNN. The move is part of new CEO Brian Niccol’s strategy to reposition Starbucks as a premium brand while also reducing the strain on employees, who get flooded with work when promotions are high.
The company in September offered extra loyalty points on Tuesdays and deals on several drink purchases on Saturdays. This was a shift from deeper discounts that spanned many months earlier this year, like “buy one, get one free” and 50% off.
Starbucks also isn’t planning to run broad offers during the holiday season, and instead aims to promote seasonal drinks through advertising, the Journal noted.
In the past, Starbucks had mostly avoided coffee promotion but ramped them up earlier this year to lure back customers.
It’s now reversing that strategy — one of the first major moves under Niccol, who took over in September. Starbucks’ sales have fallen for two straight quarters.
Infrequent customers that typically visit in the afternoons and customers ages 18 to 29 have drifted away from Starbucks recently, Bank of America analysts said in a research note last week.
Niccol wants to make Starbucks (SBUX) a coffee shop again, not just an online-driven business.
Niccol said in a letter last month to employees and customers that he wants to return Starbucks to its roots as a “community coffeehouse” with comfortable seats, improved design and a clear distinction between “to-go” and “for-here” service.
“There’s a shared sense that we have drifted from our core,” he said. “We’re committed to elevating the in-store experience — ensuring our spaces reflect the sights, smells and sounds that define Starbucks.”
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